Mexico’s treasury secretary resigned Tuesday, complaining of the appointment of unqualified officials by “influential people in the current administration who have clear conflicts of interest.”
Carlos Urzua, a longtime ally of President Andrés Manuel López Obrador, did not specify who he meant. But his resignation letter suggested that ideology might be involved.
Urzua wrote that economic policy should be “free of extremism, whether that be right or left,” but said “that belief was not reflected” by the administration. He also accused López Obrador of making policy decisions “without sufficient justification.”
Urzua’s resignation came at a sensitive time for López Obrador, who faces threats of tariffs from the United States and downgrades from ratings agencies.
López Obrador said he had accepted Urzua’s resignation, but did not respond to the accusations. Instead he said, “We cannot continue with the same strategies. You cannot put new wine in old bottles.”
The president appointed Assistant Treasury Secretary Arturo Herrera to replace Urzua, and said his job would be “to create wealth, in order to distribute wealth.”
Herrera served as chief of finances for López Obrador when he was Mexico City mayor in the early 2000s, and has also worked for the World Bank.
López Obrador has sought to appease the business community, but has also drawn criticism for shoring up the state-run oil company, building refineries and canceling a partly built Mexico City airport project.
The president has gone on an unceasing austerity drive to reduce spending on government salaries, but has also created a series of new direct-grant cash payment programs for youth scholarships and training programs, and expanded payments for the elderly.
Alfredo Coutino, Latin America director at Moody’s Analytics, said Urzua had provided some confidence for investors, and his resignation roiled markets, with stocks dropping almost 1% and the peso falling to about 19.15 to $1.
Urzua “was an important key inside the economic team to ensure confidence for markets, investors and businessmen,” said Coutino. His resignation “really introduces uncertainty … for markets, it’s a big shock.”
Last month, Fitch Ratings downgraded Mexico’s long-term foreign currency and local currency issuer default ratings, citing Pemex’s continued deterioration and the country’s continued weak economic outlook. It said actions taken so far by the government to prop up Pemex were not sufficient to stop the company’s decline.
Moody’s lowered the country’s economic outlook to negative from stable in June. And on Tuesday, Moody’s reduced its forecast for the economy’s growth to 1.2% for the year, down from 2% the previous year.
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